• OUTLOOK ARENA
  • JUNE 23, 2022

Should You Buy Smallcap Stocks in a Bearish Market?

Buying smallcap stocks in a falling market is the last thing an investor wishes to do.

The Small-Cap index hit an all-time high (ATH) of 12,047 in January 2022 and corrected over 30% from the high. Whereas, the NSE Nifty has corrected close to 18%.

During the bearish momentum, fear leads to more sell-off in smallcap stocks.

The small-cap index is trading at a support area of the trendline, and the moving average indicates the best investment opportunity.

Small Cap/Nifty50 Ratio Chart

 

This is the ratio chart of SmallCap/Nifty50. The ratio going higher means smallcaps are outperforming against Nifty50 and vice versa.

The ratio broke out of iH&S in 2021 and I did a short video on that back in April.

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The ratio has retested the breakout of iH&S indicating this is best time to buy smallcap stocks in the market correction.

The bullish divergence on RSI signals a reversal.

Investors should look for fundamentally strong smallcap stocks.

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Happy Investing!

{lb~Smallcaps}

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